Case Law Details
CIT TDS Vs Mewar Hospital Pvt Ltd (Rajasthan High Court)
Before proceeding with the matter, it will not be out of place to mention that the assessee is running a hospital within State of Rajasthan and they have entered agreement with three different doctors. The question which came up for our consideration is whether benefit of 194J and 192 is to be given where TDS is required to deducted.
Counsel for the appellant rightly contended that in the agreement which was entered between the parties, there is no restriction of private practice whereas in case of service/appointment order, there is prohibition for grant of benefit which are required to be given under the law and are granted to the employees whereas in the case of retainership it is only an honorary or professional agreement is entered between the parties which may be analogous to the major service conditions but both the contract are different. One is contract as an employee and the other contract is service for honorary or expert service not as a employee which was entered between the parties. Therefore, question which came for our consideration is whether payment which was made to the professional is salary or professional fees.
Again same question came up for consideration in other decision of Karnataka High Court where after considering the judgment in Elbit Medical Diagnostics Ltd., the Court has come to the conclusion that retainer in service are professional service and issue was answered in favour of the assessee.
Taking into consideration the evidence on record, only one view taken by the Tribunal is also contrary, it two views are possible, the view much which in favour of assessee is to be taken and in view thereof in the present case, the issues are answered in favour of the assessee and against the Department.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
The present D.B. Income Tax Appeal under Section 260A of the Income Tax Act, 1961 has been filed by the Commissioner of Income Tax-TDS, Jaipur against the order dated 05.01.2021 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur in IOTA No.01/JODH/2020 for the Assessment Year 201819, whereby the appeal against the order of learned CIT (A-1), Udaipur dated 10.10.2019 was dismissed.
Learned counsel for the appellant frankly conceded that the appeals involving similar issue have already been dismissed by this Court in view of the judgment passed by the Division Bench of this Court at Jaipur Bench in Escorts Heart Institute & Research Centre Ltd. Vs. Deputy Commissioner of Income Tax (D.B. Income Tax Appeal Nos.8 and 9 of 2014 decided on 13.09.2017).
Operative part of the order dated 13.09.2017 reads as under:-
“13. Before proceeding with the matter, it will not be out of place to mention that the assessee is running a hospital within State of Rajasthan and they have entered agreement with three different doctors. The question which came up for our consideration is whether benefit of 194J and 192 is to be given where TDS is required to deducted.
14. Counsel for the appellant rightly contended that in the agreement which was entered between the parties, there is no restriction of private practice whereas in case of service/appointment order, there is prohibition for grant of benefit which are required to be given under the law and are granted to the employees whereas in the case of retainership it is only an honorary or professional agreement is entered between the parties which may be analogous to the major service conditions but both the contract are different. One is contract as an employee and the other contract is service for honorary or expert service not as a employee which was entered between the parties. Therefore, question which came for our consideration is whether payment which was made to the professional is salary or professional fees.
15. Taking into consideration the case law which has been cited by both the sides, the judgment of Karnataka High Court (supra) which has been relied upon by the counsel for the appellant and after taking into consideration that all the judgments and the rulings cited by both the sides were considered in the said judgment and the issue was decided as under:
“The contention of the learned counsel appearing for the assessee that CIT had issued an order under s. 10(23C)(via) of the Act, by virtue of which the assessee is not liable to deduct TDS under s. 194-I as the recipient itself is exempted from levy of tax, is not acceptable for the reasons that the said order was issued by the CIT, Panaji for the asst. yr. 2005-06 to 2007-08 subject to the compliance of conditions (I) to (vi) specified therein. The said conditional order shall not absolve the assessee from the deduction of TDS liability. The compliance/non-compliance of the exemption conditions by the recipient in advance cannot be foreseen in advance by the assessee-company. Moreover, TDS liability under s. 194-I is not dependent on the tax liability/entitlement to exemption of the recipient. Irrespective of the tax exemption/tax liability of the recipient the assessee has to discharge the TDS liability under s.194(1). No certificate under s. 197 of the Act is furnished by the assssee to establish that the recipient is exempted from the tax liability.”
16. Again same question came up for consideration in other decision of Karnataka High Court where after considering the judgment in Elbit Medical Diagnostics Ltd., the Court has come to the conclusion that retainer in service are professional service and issue was answered in favour of the assessee.
17. Taking into consideration the evidence on record, only one view taken by the Tribunal is also contrary, it two views are possible, the view much which in favour of assessee is to be taken and in view thereof in the present case, the issues are answered in favour of the assessee and against the Department.
18. The appeals stand allowed.”
In view of the above, the present appeal is liable to be dismissed and is accordingly dismissed.
